Is Fair Use Fair Value?

In the Report the ALRC tabled on 13 February 2014 as a result of the 18-month inquiry they conducted into copyright reform for the Digital Economy, the ALRC makes 30 recommendations. The primary recommendation is for the introduction of a fair use exception to Australian copyright law.

What is the current model in Australia?

The current system in Australia is the fair dealing exceptions that is a closed list of exceptions in contrast to the open-ended fairness test proposed in the ALRC report that has characterised US copyright law since 1978. As it stands the current exceptions or the ‘fair dealing’ rules that relate to the use of copyright material are:

  • Research or study
  • Criticism or review
  • Parody or satire
  • Reporting news
  • The provision of professional advice

What is ‘fair use’?

Fair use is a defence or exception to copyright infringement. The primary question of any particular use is whether ‘is this fair?’ The ALRC has recommended that this is determined on a case-by-case or subjective basis and does not suggest that the statute define what is fair.

In deciding whether the use of a work is fair, a number of criteria dubbed ‘fairness factors’ are considered. These fairness factors are provided in the proposed provision. Law that incorporates such principles or standards is generally more flexible and adaptive than prescriptive rules.

Most fair use provisions around the world list the same or similar four fairness factors. These are also factors that appear in the current Australian exceptions for fair dealing for the purpose of research or study, including in the United States. The four fairness factors are non-exhaustive; other relevant factors may be taken into account. In other jurisdictions fair use provisions set out illustrative purposes—these are examples of broad types or categories of use or purposes that may be fair. These examples are not considered to be limiting, simply an example of where and when fair use may occur.

Also, just because a use falls into one of the categories of illustrative purpose, does not mean that such a use will necessarily be fair. It does not even create a presumption that the use is fair. In every case, the fairness factors must be ‘explored, and the results weighed together, in light of the purposes of copyright’. This level of proportionality ensures an appropriate outcome based on the merits of a case.  Furthermore, where copyright legislation includes an exception for fair use, there will also be other more specific exceptions that operate in addition to fair use such as the fair dealing exceptions already contained within the Act.

The ALRC has stated that fair use is not a radical exception and it largely codifies and clarifies the common law. Fair use and fair dealing share the same common law source. Fair use has been enacted in a number of countries, but most notably, in the United States. The ALRC have stated that the globalisation of copyright laws will make Australia a more attractive ‘host’ of foreign investors and domains. It has also been suggested that such codification will make the principles more useful and easy to operate and ensure that they are complied with rather than overlooked as it appears the current ones are.

What would ‘fair use’ in Australia look like?

The ALRC have recommended a ‘fair use’ provision analogous to the US four factor test. Analysis of the four factor test in the US requires consideration of the following matters:

First factor—‘the purpose and character of the use’. This factor encompasses two issues. First, was the defendant’s use commercial? Secondly, was the use ‘transformative’?

Second factor—‘the nature of the copyrighted work’. Again there are two separate matters to be considered. First, was the plaintiff’s work creative? Secondly, was that work published?

Third factor—‘the amount and substantiality of the portion used in relation to the copyrighted work as a whole’. This consists of an evaluation of two matters. First, how much is the defendant alleged to have taken? Secondly, how important was that taking in the context of the plaintiff’s work?

Fourth factor—‘effect upon the market for or value of the copyrighted work’. What is the market effect of the defendant’s conduct?

What are the benefits of ‘fair use’?

The subjectivity of the ‘fair use’ test makes it a model that is best able to evolve over time and meet varying needs. It also makes the provision more easy to navigate and comply with. One of the big complaints in many of the submissions to the ALRC regarding ‘fair dealing’ was difficulty understanding whether or not you were required to licence and if so for how much in order to properly comply.

Finally, the ‘fair use’ exceptions will align Australia with other international jurisdictions and with the US particularly. In support of this, the ALRC stated:

"The standard recommended by the ALRC is not novel or untested. Fair use builds on Australia’s fair dealing exceptions, it has been applied in US courts for decades, and it is built on common law copyright principles that date back to the 18th century."

"If fair use is uncertain, this does not seem to have greatly inhibited the creation of films, music, books and other material in the world’s largest exporter of cultural goods, the United States."

It is arguable that the recommendations of a ‘fair use’ exception is a simplification and modernisation of the Copyright Act 1966. ‘Fair use’ exceptions align Australia with the international copyright community and the jurisprudence in the area may encourage creative industry development unencumbered by production costs and a simpler and a user-friendlier provision to use and operate.